California Auto Insurance: Understanding The System

California requires vehicle owners to have auto liability insurance, which covers the cost of medical expenses, property damage, and other costs associated with personal injuries caused during an accident. The minimum coverage is $15,000 per person, $30,000 for all persons injured in a single accident, and $5,000 for property damage. This basic form of liability auto insurance is mandatory for anyone who wishes to drive on public roads in California.

Minimum insurance requirements

In California, vehicle owners are required to show proof of insurance or another form of "financial responsibility" to register their vehicle. Driving without insurance in California is illegal and can result in fines, a suspended license, and an impounded vehicle.

The minimum insurance requirements in California are as follows:

• Bodily Injury Liability Coverage: $15,000 per person and $30,000 per accident minimum. This covers the injury or death of any one person in an accident you cause, up to $15,000, and a total of $30,000 for the injury or death of multiple people in any single accident.
• Property Damage Liability Coverage: $5,000 minimum. This covers damage to the property of other people, such as their car or objects and structures that your car hits.
• Uninsured Motorist Bodily Injury Coverage: $15,000 per person and $30,000 per accident minimum. This covers your expenses if you are in an accident with a driver who does not have insurance.
• Uninsured Motorist Property Damage Coverage: $3,500 minimum. This covers damage to your vehicle caused by an uninsured driver.

In addition to the above minimum requirements, all drivers in California are also required to carry collision and comprehensive coverage. Collision coverage pays for damages resulting from an accident with another vehicle, while comprehensive coverage pays for damage caused by something other than a collision, such as theft or vandalism.

Bodily injury liability coverage

In California, drivers are required to have bodily injury liability insurance to cover any injuries they may cause to other people in a car accident. This is a mandatory form of insurance and is required for anyone who wishes to drive on public roads. The minimum coverage is $15,000 per person and $30,000 for all persons injured in a single accident. This means that if you are found to be at fault in an accident, your insurance will cover the other party's medical bills and other damages up to these amounts. Bodily injury liability insurance does not cover property damage, car repairs, or injuries to you or your passengers. Therefore, it is recommended to purchase policies with higher limits than the state minimum if you can afford them.

Bodily injury liability insurance covers various losses, including emergency room charges, doctor's bills, hospital bills, physical therapy, short- or long-term care, and dental expenses resulting from the accident. It also covers past and future lost wages if the injuries prevent the other party from working.

If the damages exceed the policy limits, you will be personally liable for any amounts above the limit. In addition, bodily injury liability insurance does not cover property damage or car repairs, so it is important to have separate property damage liability insurance to cover these costs.

It is important to note that bodily injury liability insurance only applies when you are at fault for the accident. If the other driver is partially or wholly at fault, their bodily injury liability insurance or your own insurance may cover your medical expenses.

California also mandates uninsured motorist coverage (UM) to protect you in case of an accident with an uninsured driver. You can choose to purchase higher levels of UM coverage for added protection.

Property damage liability coverage

This coverage simplifies minor accidents by directly paying small claims, bypassing the need for lengthy liability investigations. It covers damage to another person's property caused by your vehicle, regardless of fault. For example, if you hit a fence or mailbox while parking, or if your lawnmower kicks up a stone that chips a neighbour's paintwork, property damage coverage will take care of the repairs.

The minimum property damage liability coverage limit in California is $5,000 per accident. However, experts generally recommend higher limits of at least 100/300/100, as claims can be costly. You can increase your liability limits to ensure better protection.

It's important to note that property damage liability coverage only applies to damage caused to someone else's property and does not cover damage to your own vehicle. To protect your own car, you may consider additional coverages like collision coverage and comprehensive coverage.

Uninsured motorist coverage

If you are injured by an uninsured or underinsured driver, having uninsured motorist coverage allows you to still collect damages for medical costs, lost wages, car repair bills, pain and suffering, and other losses. It is highly recommended that you purchase uninsured motorist coverage, as the minimum automobile insurance required in California is often too low to cover damages for all but minor accidents.

If you can afford it, it is recommended that you buy as much uninsured motorist coverage as possible. A $300,000-$500,000 policy is advised.

Collision and comprehensive coverage

In California, collision and comprehensive coverage are required for most vehicles. If you are financing your vehicle through a bank or financial institution, they will likely require you to maintain physical damage coverage, including collision and comprehensive. This protects their investment in your vehicle. Once your vehicle is paid off, you may choose to discontinue this coverage, but it is recommended to consider factors such as the age and value of your vehicle, the cost of replacing your vehicle without this coverage, and your personal attachment to the vehicle.

When deciding whether to purchase collision and comprehensive coverage, it is important to evaluate the value of your car, your driving habits and location, and your current savings. If you have a high-value car, drive frequently or in areas with higher traffic volume, or do not have sufficient savings to cover the cost of repairs or replacement, then purchasing collision and comprehensive coverage is highly recommended.

In California, it is generally accepted that insurance follows the car. However, there may be exceptions, so it is important to review your policy in advance if you plan on temporarily transferring your vehicle or borrowing someone else's. Comprehensive coverage can provide protection in most situations, as it will cover damages and injuries regardless of who is driving the vehicle with the owner's permission.

Frequently asked questions